Costs related to end stage renal disease (ESRD) represent the largest category of Medicare expenses accounting for nearly 6% of the entire Medicare budget in 2007. This application offers a strategy to increase the number of patients that can be transplanted each year through kidney paired exchanges by redesigning the payment for healthy donors who are found to be incompatible. The project will define the true costs incurred by this new approach to creating additional living donor kidney transplants, and will identify the return on investment for payers by quantifying the number of transplants that are achieved through implementation of a new payment strategy. The demonstration project will redesign payment for KPD transplants to create a sustainable payment model that will be analogous to the current payment strategy employed to pay for the evaluation, recovery and transportation of deceased donor kidneys in America. By the end of the project, it is estimated that 451 KPD living donor kidney transplantations will be created that would not otherwise have been possible. The overall cost of the demonstration project will be $1.99 million ($20,478 per transplant), but the creation of 451 kidney transplants compared to these same patients remaining on dialysis has the potential to result in savings of over $95 million for Medicare and commercial insurance carriers and provide a value of $120-$225 million considering quality of life. At present only one Organ Procurement Organization in America, Southwest Transplant Alliance (STA) has an active CMS- approved standard acquisition charge (SAC) in place to pay for KPD incompatible donor evaluations. It is notable that the STA SAC fee only covers $11,000 per KPD transplant and only pays for the incompatible living donor evaluation component of the total expenses attributable to a KPD transplant. There is no strategy in place to reimburse the additional costs incurred by KPD compared with traditional living donor kidney transplantation. Thus, our specific aims are as follows: Specific Aim One: Collect actual financial data from a clinically active kidney paired donation program that will allow the calculation of the real-life cost per KPD transplant so that a realistic KPD standard acquisition cost (SAC) can be designed to reflect accurate historical data. Specific Aim Two: Pay for the additional expenses associated with the average KPD transplant that are not currently allowable until a sustainable KPD SAC is designed. Specific Aim Three: Since the cost per KPD transplant will decrease significantly over the course of the demonstration project, the demonstration program funds will pay for the high start-up costs of establishing an accurate, affordable KPD SAC and thereby increase the likelihood that the stakeholders will adopt the redesigned payment strategy to create a sustainable model for the future. PUBLIC HEALTH RELEVANCE: End stage renal disease takes a huge toll on society - both in terms of lives lost, quality of life of those suffering from kidney disease, and the incredible burden to the current healthcare system (reportedly 6% of all Medicare expenditures in 2007). An innovative approach to providing more kidney transplants to the 84,000 people awaiting an organ - kidney paired donation - is hampered by the current payment system, which creates barriers to participation from both transplant centers and potential altruistic and incompatible donors. Establishment of a Standard Acquisition Charge model to pay for paired exchange transplants has the power to transform the current healthcare payment structure, thereby saving lives and saving millions of dollars in healthcare spending.